NPS Overview

National Pension System or NPS is a Government of India initiative that aims to provide retirement benefits to all citizens (resident and non-resident) of India. It is a voluntary retirement scheme through which individuals can create a retirement corpus or old-age pension. Regulated by Pension Fund Regulatory and Development Authority (PFRDA), NPS is useful for employees, employers and for self-employed professionals.

Why NPS?

National Pension Scheme is an affordable, easy to manage investment solution for all Indian citizens. The primary objectives of NPS are:

Helping people develop a regular habit of investment
Providing financial stability post-retirement, through regular income
Offering attractive market-linked returns on investment

NPS Eligibility Criteria

FAQs

What is a national pension scheme?

Who is eligible for a national pension scheme?

It offers dual benefits of pension and tax

Want to open NPS Account?

You can easily apply for NPS online from here

Apply Here

Who should Invest in NPS?

Individuals who want to accumulate a substantial retirement corpus over time.
Individuals who do not have access to employer-sponsored retirement plans.
Individuals looking for regular income after retirement.

Now that we understand what NPS is let us look at the potential of the scheme using various case studies.

Ronit is 28 years happily married to an IT professional with a futuristic approach to life. He wishes to retire with financial independence and achieve all his life goals. He actively invested in NPS to create a corpus for his retired life and claim the tax benefits yearly.

He started contributing to NPS.

Monthly investment: ₹10,001

Total Corpus at retirement: ₹2.80 CR *

*Rate of return: 10%

At 60 years of age, he gets 60% lump sum i.e & 1.68 CR and 40% invested in annuity i.e & 1.12 CR to receive guaranteed regular income of approx. ₹74,889/-** for himself G his spouse lifetime.

*Rate of return given in above illustration is indicative in nature and not guaranteed or provided any assurance in future. Investments are subject to market risk
**As per prevailing annuity rate for joint life annuity without ROP

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Things you should know

Tax Benefit

NPS contributors enjoy tax-free gains as their contribution is eligible for tax deduction under Section 80C, and exempted from tax upon maturity.

Returns

NPS subscribers can allocate their funds with a mix of equity and debt, thus getting higher return than traditional retirement schemes.

Power of Compounding

NPS allows you to grow your wealth exponentially because of the long-term investment horizon.

Portability

NPS offers two types of investment options - Active Choice and Auto Choice. The subscriber can select the best option based on their investment goals and risk appetite.

Investment Choices

NPS subscribers can select their investment pattern based on their risk appetite. NPS typically allows exposure to equity up to 75% under Tier 1 accounts.

Hassle-free online process

NPS subscribers can open and operate their account digitally, from anywhere, in a hassle-free manner.